Intellectual Property – Civil Litigation

Though you may not have known about it, the government and the music industry recently went to battle.

And though you may not have known about it, it affects you whether you’re a musician, a business owner, or a music fan.

While the government won, the outcome is not final, and the music industry will continue its fight. And with parties on both side agreeing that legislative change would be ideal, such change may come in the not-too-distant future.

The Dispute Over Blanket Licenses

Imagine how difficult it must be for musicians to singlehandedly license their music and collect royalties for it. To seek to collect from every business owner (think bars, restaurants, gyms, retail establishments, and more), radio station, or digital music service (like Pandora and Spotify) who uses an artist’s music would be a monumental task. It could actually take more time than it would take to record new music. And if that were to happen, artists would quickly find themselves running out of money.

That’s where PROs come in. PROs, short for Performing Rights Organizations, collect royalties on behalf of the musicians they represent. Because PROs make it so much easier for musicians to get paid, most musicians join one, usually BMI or ASCAP.

Concerned about the monopoly created by these PROs, the government filed an antitrust lawsuit against them in 1941. As part of the settlement, the PROs agreed to issue blanket licenses to music users like the businesses described above. Blanket licenses allow for music users to pay a single fee to a PRO in exchange for access to the PRO’s entire catalog of music. These licenses give businesses the freedom to offer a wide variety of music to their customers without having to worry about the threat of an infringement lawsuit.

The music industry has inarguably changed since 1941, but the settlements remain intact as they were entered into 75 years ago. ASCAP and BMI, with the support of other key music industry players, recently asked the Department of Justice (“DOJ”) to review and update the rules of their settlements (also called “consent decrees”).

The DOJ said no.

Proposed Changes to the Consent Decrees

As the consent decrees currently stand, the DOJ says the PROs are required to provide “full work” licenses. To illustrate how these licenses work, suppose you are a musician represented by BMI and your songwriting partner is not. This means you and your partner fractionally own the rights to the work, and two things can happen.

First, you may offer the song through BMI, even without your partner’s express permission, so long as you ensure that person gets their share of the royalties. This is due to the way copyright law treats joint works of authorship.

Second, if I have a BMI blanket license for my business, I can use your song without having to worry about tracking down your partner to get permission. My blanket license “covers” the musical work in its entirety, regardless of anyone else who may have had a role in its creation (or later acquired rights in the music).

Music users tend to believe that the PROs have always offered full work licenses. Yet music rightsholders (such as writers and producers) disagree, claiming that the PROs never offered such licenses to perform works over which they only had fractional control (such as the one in our example).

BMI and ASCAP take the position that the consent decrees do not prohibit fractional licensing, but suggested that the consent decrees be amended to explicitly allow for fractional licensing. So if I wanted to use your song, I would now have to track down your partner to get their permission, or get a blanket license with their PRO.

In addition to requesting fractional licensing, the music industry also sought for music creators to be able to partially withdraw rights from the PROs. That is, artists want to be able to prevent PROs from granting rights to certain users, such as digital music services. Under such a plan, my license might permit me to play all of BMI’s musical works at my health club, while Pandora would not be granted the same rights.

The DOJ Rejected These Requested Modifications

While the DOJ acknowledged that it may soon be time to update the consent decrees, it rejected the request to do so right now.

The decision rests largely on the language in the consent decrees. The decrees require ASCAP to offer its users the ability to perform all “works” in its catalog, and BMI to offer its users the same for all “compositions” in its catalog. To allow the PROs to now determine that only some music would be covered contradicts the plain language of the settlements.

Moreover, only full work licensing delivers the benefits that the PROs provide to the public. As the Supreme Court of the United States explained in one famous case, blanket licenses “allow the licensee immediate use of covered compositions without the delay of prior individual negotiations, and great flexibility in the choice of material.” Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 21-22 (1979).

If the PROs were to begin issuing fractional licenses, music users would be required to individually negotiate each track they wanted to use. The time it would take to do so would prevent immediate use of the music in question. Fractional licenses would also likely reduce the scope of the music users would be able to work with. If someone with rights to a certain song were to withhold a license, users would be infringing – contrary to the very protection that a blanket license is intended to provide.

As the DOJ noted, fractional licenses would give rightsholders bargaining leverage to demand substantial sums of money. Of course, such bargaining power would necessarily depend on whether all the rightsholders could even be identified. Songwriting credits (and transfers of rights, if applicable) are often not established until after a new track is released. Moreover, there is no uniform tracking system in place which shows who all the rightsholders are for any given song. As such, music users would not even know who to contact to obtain a license.

Who else would be impacted? The end users. The purpose for licensing is to entertain the public (i.e. a business’s customers). Yet the proposed changes to the consent decrees mean they would probably not get to hear as much music as they do now.

For all of these reasons, the Department determined that fractional licenses are not in the public interest. It stated that the consent decrees require full work licensing and refused to modify them.

Change May Occur in the Future

The industry argues that fractional licensing would encourage competition, thus accomplishing the aims of the 1941 antitrust lawsuit. Such licensing would also promote collaboration between music creators who are represented by different PROs (or are not represented at all). By requiring full licensing, the government is impeding creativity and taking an undue role in musicians’ business and financial decisions.

BMI is challenging full licensing in federal court. The PRO recently submitted a letter seeking to confer with the court and the government before filing a motion. The motion will seek either (a) a declaration that BMI’s consent decree does not require full work licensing or (b) a modification to the consent decree specifically allowing for fractional licensing.

ASCAP is also taking action. The PRO is seeking legislative changes which would allow for fractional licensing and reflect the collaborative dynamic that is a hallmark of music in the digital age.

It’s too early to tell whether either effort be successful. Yet the DOJ itself said that a “comprehensive legislative solution may be possible and preferable.” With all parties agreeing that something should change, perhaps it will occur sooner than expected.

If you have a question about music royalties, or any other entertainment or intellectual property-related legal matter, contact us at (561) 953.9300 or visit us online at http://www.lomnitzerlaw.com.

Music and politics have always made for natural bedfellows. No wonder – both provide telling portrayals of the cultural zeitgeist at any given time. Musicians frequently write about politics and political issues. And politicians (like many others) are often inspired by music.

But for political candidates who wish to express their musical tastes by using particular songs as campaign music, many musicians have only one thing to say:

How can this be? Haven’t these musicians already given permission for their songs to be used? And if they didn’t give permission, can’t they just sue the candidate?

The short answer is that politicians do need permission—but not always from the musician (or other copyright holder, as not all copyrights are owned by their creators. We use the word “musician” in this blog post to refer to whoever the copyright owner may be.)

There are various types of music licenses, and the license required depends on how the music is being used. A televised commercial requires two licenses. One is a mechanical license, which grants reproduction and distribution rights for a musical recording. The other is a synchronization license, which permits the license-holder to sync the musical recording with corresponding audiovisual images. These licenses are generally issued by rights managers or publishers on behalf of the musician. So any time you hear a song on a televised commercial, the musician has given approval (or the entity airing the commercial is opening themselves up to a lawsuit).

But a live event, such as a campaign stop or party convention, is different from a commercial and requires a different kind of license: a public performance license. These licenses are granted by performing rights organizations (PROs), which collect royalties on behalf of musicians for the public performance of their songs. When a song is played on the radio, at a nightclub or gym or otherwise performed publicly, PROs collect and distribute the payments for these performances.

As you may imagine, the vast number of songs played daily mean that there’s a lot to keep track of. One way PROs handle this is by offering blanket licenses. These allow for the music user to publicly perform any song in the PRO’s music catalog. No permission is needed from individual musicians.

Here’s how this all works in real life. Take, for example, “We are the Champions” by Queen. A political candidate could not use the song in a television commercial without getting permission from the band. However, if a candidate wanted to play “We are the Champions” at a campaign rally, or at his party convention, he would only need a license from Queen’s PRO, BMI. And if the candidate were to have a blanket license from BMI, then he would be within his rights to play any song in BMI’s catalog at his political rally. Whether or not Queen approves does not matter.

So what recourse do musicians have when a political candidate they don’t like uses one of their songs? If a musician wants to litigate:

They can attempt to sue under the federal Lanham Act, which controls trademarks and deals with (among other things) falsely implied endorsements. A musician might argue that the politician’s use of the song implies that the musician endorses the politician, in violation of the act.

This concept hasn’t been very well tested in the courts, though, and the lawsuit that went furthest on this issue had its Lanham Act claims rejected. Plus, with so many musicians this election season speaking out against the use of their music, the “implied endorsement” theory might be a long shot.

Musicians can sue under right-of-publicity laws, which also often cover false endorsements. Yet these laws vary state by state, and not all states have one. The state where the song was played would need to have a right-of-publicity law in order for legal action to be possible. And even still, the implied endorsement theory might fail.

Songs that were recorded before 1972 are currently not subject to federal copyright law, but to state law. So if a pre-1972 song were played at the Democratic National Convention, a court would look to Pennsylvania law to determine whether that state protects against the unauthorized performance of music. If the state does, then the musician may have a valid cause of action.

But litigation can be expensive and time-consuming – and there are no guarantees of success. So musicians might want to try one of these alternate methods:

They can ask their PRO to revoke the license for the particular song, creating an exception within the blanket license. This purportedly worked for Queen, who did not want “We are the Champions” to be played at the Republican National Convention.

And of course, they can take their case to the court of public opinion. This seems to be the most popular option this election cycle, with many musicians making statements through their publicists and venting their frustrations on social media. Which is how tweets such as “@ScottWalker @GovWalker please stop using our music in any way…we literally hate you !!! Love, Dropkick Murphys” make their way into the public consciousness.

Copyright law can be confusing. If you have a question about copyright law or would like to discuss a matter pertaining to copyrights, trademarks, patents, or rights of publicity, visit us online at www.lomnitzerlaw.com or call us at 561.953.9300.

It was a memorable trial in which the plaintiff’s lawyer used the defendant’s album artwork as his computer screensaver… the jury got to listen to music from the classic Disney musical Mary Poppins… and one of the world’s greatest guitarists played both air guitar and air drums from the witness stand.

The fanfare was almost enough to make spectators forget what the suit was about.

But the high stakes of the case Skidmore v. Led Zeppelin, which accused the seminal English rock group of copyright infringement over their biggest hit, “Stairway to Heaven,” helped keep the merits of the case at the forefront.

If you thought you’d heard before that Led Zeppelin “ripped off” someone else’s music, you probably did. The band has been accused more than once of co-opting others’ sounds in the creation of their own works. “Stairway to Heaven” in particular has been the subject of these rumors for decades. Yet the song was released 45 years ago, and copyright law has a statute of limitations (the time limit in which to file a lawsuit) of 3 years after an infringement is discovered. So how and why can the band be sued over it now?

The short answer is that copyright law provides that each new infringement of a work is a discrete claim which starts a new statute of limitations period. In this case, Led Zeppelin founder Jimmy Page has spent the past several years remastering and rereleasing Led Zeppelin’s catalog of studio albums. “Stairway to Heaven” was rereleased in 2012, triggering a new timeframe to bring infringement lawsuits related to the song.

The lawsuit was brought by the estate of a guitarist named Randy Wolfe, who played in a band called Spirit in the 1970s. Wolfe’s estate accuses Led Zeppelin of infringing on Spirit’s song “Taurus,” which was released before “Stairway” and contains a similar chord progression.

That chord progression proved to be a problem for the plaintiff. The sheet music for both songs demonstrated that the melodies of the songs were not the same—only the chord progression was. And as for any chord progression, there are only 12 music notes, placing an inherent limit to how many ways they can be assembled.

Led Zeppelin seized upon this fact, with Page telling the jury that “Stairway to Heaven” was largely inspired by the Mary Poppins song “Chim Chim Cher-ee,” which has a similar progression. The band also set forth evidence that this progression was used at least as early as the 1600s in a classical composition that is now in the public domain. More recently, a group called the Modern Folk Quartet released a song in 1963 containing the progression—five years before Spirit released “Taurus.”

It didn’t take long for the jury to decide that Led Zeppelin was not guilty of infringement, to the joy of musicians and songwriters everywhere.

After all, the industry is still reeling from the surprise decision last year that Robin Thicke and Pharrell’s hit “Blurred Lines” infringed Marvin Gaye’s “Got to Give it Up.” In our blog about that case, we discussed how the outcome could have a chilling effect on the music creation process. And since that time, infringement lawsuits have been brought against popular artists including Justin Bieber and Ed Sheeran. The Led Zeppelin case, had it turned out differently, had the potential to continue this trend—and to make other artists think twice about releasing remastered or legacy editions of older albums. But the decision in this case may reverse the tide.

Experts suggest that the plaintiff might appeal the verdict by arguing that certain evidence should have been allowed into the trial – particularly the musical recordings of the songs. There are different copyrights for different aspects of a song, and the plaintiff’s “Taurus” copyright is only in the composition (the sheet music) rather than in the sound recording. Consequently, the jury never heard Spirit’s recording of “Taurus”; rather, they heard only an expert performance of the sheet music.

Yet these same experts suggest that an appeal would be unsuccessful. The only question would be whether the judge abused his discretion by not allowing the original recording to be heard. This is a stringent standard, and courts are often hesitant to make such a finding.

The issue of attorneys’ fees could also deter an appeal. Copyright law gives the courts discretion to assess attorneys’ fees even if the losing party had a reasonable claim, and a party’s conduct during the litigation can play a role in this decision.

In the instant case, the plaintiff’s attorney prompted more than 100 sustained objections and numerous rebukes from the judge. This behavior could factor into the court assessing costs against the plaintiff estate even if it doesn’t appeal—and if it does, the likelihood of being charged for Led Zeppelin’s legal fees rises.

Of course, one could argue that the plaintiff has already been successful in one regard. The estate’s trustee testified that he brought this lawsuit to cement Wolfe’s legacy. It’s safe to say that far more people now know about Randy Wolfe, Spirit, and “Taurus” than did before the suit. So if the case is truly about a legacy rather than royalties, the plaintiff has already won.

If you have a question about copyright law, or any other intellectual property matter, visit us online at lomnitzerlaw.com or call 561.953.9300.

Does your work involve trade secrets? If it does—or even if you’re not sure—there’s some new legislation that you should know about: the Defend Trade Secrets Act (“DTSA”), which was recently signed into law by President Obama. Here’s some information about the act and how it may affect you.

What is a trade secret?

Like copyrights, patents, and trademarks, trade secrets are a type of intellectual property. A trade secret is information (often in the form of a formula, process, pattern, or the like) that is not generally known or reasonably ascertainable by others and which gives a business an economic advantage over its competitors. An example of a trade secret is the formula for Coca Cola. The formula is closely guarded and gives Coke a business advantage over other soda makers who do not have it.

What does the DTSA do, and why does it matter?

Most intellectual property is governed by federal law, with trademarks being an exception to the general rule. These may also be governed by state law and common law, and trademark-based lawsuits often claim federal-, state-, and common-law based causes of action.

Unlike other intellectual property, trade secrets had been solely state-law causes of action until now. Without federal law governing trade secrets, plaintiffs’ claims for misappropriation were matters for state court, and remedies were dictated by state law. The DTSA now allows plaintiffs to bring trade secrets claims in federal court so long as these secrets are used in interstate commerce. In other words, plaintiffs now have the option to select the forum for their lawsuit. Because many people prefer to litigate in federal court than in state court, this is a big deal.

The Act also creates a uniform scheme nationwide for dealing with misappropriation, providing remedies and responsibilities that will apply to all litigants across the board. Finally, as with trademarks, one can sue under federal law, state law, and common law. The DTSA does not limit a plaintiff’s recovery under state law or at common law.

Does the DTSA provide any new remedies for the misappropriation of trade secrets?

The law allows for ex parte injunctions to issue in certain, very limited circumstances. This means that a court could seize the trade secret, or order a party to stop using it, without a hearing beforehand. This is in addition to whatever other remedies are available.

However, parties should carefully consult with their attorney to consider whether an injunction is an appropriate measure to seek. If one is granted and later found wrongful or excessive, the DTSA gives the latter a cause of action against the party seeking the injunction.

For employers, exemplary damages and attorneys’ fees are available in a trade secret suit where the employer has provided notice of immunity in agreements or contracts entered into or updated after May 12, 2016 with employees, contractors or consultants. All new agreements (entered into after May 12, 2016), as well as any amendments or other “updates” to preexisting agreements, should include an appropriate disclosure identifying the immunity provisions of the DTSA if the contract relates to trade secrets and/or other confidential information.

Does the DTSA protect whistleblowers?

To encourage compliance with the law, numerous federal acts (as well as state acts, as applicable) provide whistleblowers with civil and criminal immunity. The DTSA is one such law. Whistleblowers may confidentially share trade secrets with their attorney or the government so long as they do so because they suspect a violation of the law. They may also file trade secrets under seal in court documents for the same reason. In the event that an employer retaliates against a whistleblower, the whistleblower can use the trade secret in an anti-retaliation lawsuit, so long as its confidentiality is maintained.

Some employers require their employees to be subject to a contract governing the use of trade secrets or confidential information. These employers must alert their employees about the immunity provision of the DTSA, either within the contract itself or by referring to a different company document which explains this aspect of the law. If an employer does not include the immunity provision, they will not be able to collect exemplary damages or attorneys’ fees in the event of litigation.

How do I find out more about trade secrets and the DTSA?

While the above is general information rather than legal advice, we regularly work on cases involving the misappropriation of trade secrets. If you’d like to discuss a legal matter pertaining to trade secrets or need to speak to an attorney about updating your employment agreement/confidentiality agreements, call our firm today at (561) 953-9300, or visit us online at www.Lomnitzerlaw.com.

You’ve probably heard that the vast majority of lawsuits settle before ever making it to court. Such is the case with Sean Penn’s defamation lawsuit against Lee Daniels. Daniels has issued a public apology to Penn and made a donation to Penn’s J/P Haitian Relief Organization in exchange for Penn dismissing the suit. If you have any questions about defamation law, visit us online or call us at (561) 953-9300.

Some say yes. Others say no. The US Patent and Trademark Office (“USPTO”), which registers trademarks at the federal level, says that there are enough yesses to warrant cancelling the team’s trademark registrations. The USPTO is within its authority to do this—yet a recent court ruling makes this authority uncertain.

The USPTO acts in accordance with the federal Lanham Trademark Act. A provision in the Act bars the registration of disparaging trademarks, and so the USPTO does not register them. This of course leads to the question of what is disparaging. Further, is it really up to the USPTO to decide?

Several years ago, a group of Native Americans from various tribes sued the NFL over the Redskins name, arguing that it is disparaging. During the course of the dispute, the USPTO’s internal tribunal agreed and cancelled many of the team’s trademark registrations.

Needless to say, the team and league didn’t like this. The matter went to court and the judge ruled for the USPTO. The team and league filed an appeal, arguing that the facts of the case are the same as when they’d won a similar challenge to the Redskins trademarks in the past. The appeal is currently pending.

At the same time, and on a similar course, a musical act called The Slants is a little further along in its own lawsuit against the USPTO. The band’s trademark registration had been refused because it disparaged Asian Americans. On appeal, the court found the USPTO’s refusal unconstitutional under the First Amendment, which protects freedom of speech. The court allowed the name “The Slants” to be registered, overturning several lower-court decisions.

The USPTO has now petitioned the Supreme Court to rule on The Slants’ case, and experts expect the highest court to hear the matter. Knowing this, the Redskins have now asked for theirs to be heard at the same time as a companion case. Though a party ordinarily gets through the appeals process before having their case considered by the Supreme Court, the Court does have the authority to grant the request, and has done so in the past.

Pundits say that it might be possible to distinguish the two cases in terms of the ultimate purpose of the trademarks. The members of The Slants are all of Asian descent and argue that their name is political and expressive, which is why the “freedom of speech” premise applies. But the Redskins don’t make such an argument. The Supreme Court could decide that the USPTO cannot refuse to register expressive trademarks, but that it can refuse to register marks which are solely commercial.

For its part, the USPTO notes that it is not attempting to control the use of any given trademark, but only the registration of trademarks. That is, The Slants and the Redskins can continue to use these names, they just aren’t registrable with the government. Yet trademark registration is valuable because it affords certain protections and remedies under the law. If these registrations are denied after all the appeals, others will be able to use the marks much more freely and begin selling merchandise in conjunction with them.

Do you think trademark protection should be granted even for marks that some consider disparaging? Do you think it matters whether the trademark is expressive or commercial? Feel free to share your opinions in the comments below.

If you have a question about trademarks or any other aspect of intellectual property law, visit The Lomnitzer Law Firm online or call (561) 953-9300.

As expected, the Supreme Court declined to hear the Google Books case. This means that the decision made by the Second Circuit Court of Appeal is final, and Google Books is here to stay. For more background about the case, scroll down and read the previous blog entry. If you have any questions about copyrights or other intellectual property, visit us online or call us at (561) 953-9300.